Standing Out

Standing Out

Sometimes I have a pretty good idea which posts or articles are going to “work” — as in getting lots of views, links and even a few comments now and again. But usually I’m pretty clueless.

Some pieces I really like go nowhere and some that are almost an afterthought get lots of attention.  Obviously, predicting human behavior in any area is an activity fraught with difficulty. 

In related news, the Oscar race is heating up with — finally! — a few good movies in the offing.  I loved Lincoln, Argo, Silver Linings Playbook  and Skyfall.  I am anxiously anticipating Les Misérables and will see it on Christmas day.  I’ll watch The Master when it comes to cable.  And Zero Dark Thirty will be an absolute must-see.  Since I love the movies, this is a fun time for me.

Anyway, I was reading some Oscar prognostication when I was struck by this sentence:

The Oscars isn’t about what you like, or what critics like, or what’s good, empirically or not. It’s about what a group of relative strangers thinks is worthy.

That’s a very healthy reminder to me about what other people are going to like.  We want to think — I want to think — that my writing is good, insightful and helpful.  I think it’s worthy.  But there’s no accounting for taste (and I don’t mean that nearly as negatively as it sounds).  Lots of great ideas — in the written word, in money management and in pretty much every area you can think of — get rejected every day.  Lots of ideas I think are great really aren’t and may even suck.  And sometimes garbage sells like hotcakes.

We live in a media saturated world with an impossibly short attention span.  Every day we are exposed to hundreds of messages, including pitches of every sort, each of which is designed to try to persuade us to do something. We readily tune them out or fast-forward through them on the DVR. The sheer volume of messages reduces nearly all of them to so much background noise, making cynics of us all. I’m not going to fall for that.

Of the hundreds of messages you have received today, how many of them do you remember? Ten? Five? Even one? Maybe one. One out of hundreds.

That’s the scale of the attention problem (or the marketing problem) we all face every single day, even when our offerings — of whatever sort — are really good.  We need (or at least want) to get noticed and be remembered, despite thousands of other approaches vying for that same attention, not to mention everything else that’s going on in people’s lives. They’ve got holiday shopping to do, loved ones to think about, work to avoid, friends to see, bills to pay, news and gossip to catch up on, things to read, telephone calls to make, and cute cat videos to watch.

We tend to think that what we believe is good will “work.”  In the same way we tend to think that markets are weighing machines — the good companies (or at least the cheap companies) will prosper.  Sometimes they do…but not always.  All of us, the users and consumers of this world (and thus markets of every sort) more closely resemble voting machines, where we all vote for our favorites or at least for those we want to “win.”  Value has nothing necessarily to do with it.

Accusing someone of throwing s*** against the wall to see what sticks is usually pretty derisive.  But in reality, our overall task in the field(s) we have chosen is to throw what we think is quality against the wall to see what sticks.  A lot won’t, but some will.  The idea, then, is to keep trying to produce quality and to keep chucking.

I try to focus on that.

Netflix, Social Media and Securities Regulation

Netflix and its CEO Reed Hastings have received a Wells notice and thus may face a U.S. Securities and Exchange Commission civil claim over a July Facebook post from Hastings saying that Netflix viewing “exceeded 1 billion hours” of videos in June.  The post was widely reported, reblogged and tweeted and the company’s shares rose 6.2 percent that day, the stock’s biggest gain in almost six weeks.

The SEC’s Regulation FD, adopted in 2000, requires public companies to make full and fair public disclosure of material non-public information.

The company and Hastings claim that there is not violation because the Facebook post was not “material” information.  Hastings also asserts that a “posting to over 200,000 people is very public, especially because many of my [Facebook] subscribers are reporters and bloggers.”

“The evolution of social media presents the SEC with some very interesting regulatory challenges. But if they’re worried about social media, there are ways for them to address that without threatening to sue Reed Hastings. They should have a rulemaking where they can ventilate these issues,” said Joseph Grundfest, former SEC commissioner and Stanford Law School professor.  “This situation has nothing to do with the problems that Regulation FD was designed to address.”

It shouldn’t be a surprise that and when regulatory authorities are behind the times and forced to play “catch-up.”

Since the internet has made it so much easier for any interested party to obtain information and since social media in the business world has become ubiquitous, more traditional methods of issuing news such as press release services are much less valuable and may even become obsolete (except perhaps as a mechanism to avoid this sort of regulatory violation).  For example, after a prominent fight, the SEC now allows companies to disclose information such as earnings solely on their websites so long as they met certain criteria.

The Netflix alternative defense — that the information is not material — seems silly to me given the jump in the stock based on that “news.”  That said, since the stock tanked once earnings were announced, those who bought on the post should probably not have taken the “news” so seriously. There’s a lesson in that too. 

On the other hand, while the Facebook posting was sloppy (I highly doubt that company lawyers were involved), the post seems plenty “public” to me, especially given the extent of coverage it received via both traditional and social media.  Netflix should perhaps have issued a joint press release and perhaps even a regulatory filing in the interest of extreme caution due to the lack of clear rules in this area — that’s the careful lawyer’s answer — but the SEC has got to recognize that social media has changed the game. 

There is simply no reason to think that a press release and a regulatory filing would have provided more and better information to the public than the Facebook post.

Addendum: Brad Loncar has an excellent take on why the SEC’s action is bad policy here.